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Another Oxy fine sought; firm denies pit leaked

State regulators are proposing to fine Oxy USA $369,600 in connection with an alleged pit leak northwest of Parachute, which would bring to more than $1 million the amount levied against the company for such violations in that area.

Oxy, however, denies that its pit leaked or caused contamination.

The Colorado Oil and Gas Conservation Commission is scheduled to consider the case during its April meeting.

The commission contends Oxy used an unlined production pit in the Cascade Creek area from 2005-08, resulting in high levels of sodium, chloride and total dissolved solids in area groundwater.

Tests also showed gas-production water and petroleum hydrocarbons percolated beneath the pit into bedrock with natural fractures in it, staff members said in their proposed order finding Oxy in violation.

Factors including the existence of the bedrock fractures and several springs and creeks in the area should have led Oxy to evaluate the area for its sensitivity to groundwater contamination, regulators say. Under the state’s rules at the time, it usually required lined pits in sensitive areas. Oxy’s use of an unlined pit “created a very high potential risk for impacting ground water,” and the resulting impacts easily could have been prevented if it had lined the pit, regulators say.

The state’s new oil and gas rules, implemented in 2009, require much broader use of pit liners.

Oxy spokesman Eric Moses said in an e-mail that Oxy “is committed to safeguarding the environment,” cooperated fully with the state in its investigation and will continue to do so.

But he added, “Our investigation found no release of production fluids and no impacts from Oxy’s well pad.”

Last July, the oil and gas commission imposed what at the time was a record fine of $390,000 for another incident in the Cascade Creek area in which Oxy used an unlined pit, and carcinogenic benzene contaminated a spring.

At the same meeting, the commission fined Oxy $257,400 for a nearby leak in which the state said a torn liner in a pit, which lacked a permit, led to contamination of springs and a creek.

State regulators say they could have gone after Oxy for millions of dollars in fines in the latest case because of how long it used the unlined pit. But that would be for a violation that resulted in no documented exposure of humans to hydrocarbons, or presence of such substances in ground or surface water, regulators say.

Oxy also spent $8 million in the area to reduce the use of pits by installing more tanks to handle fluids.